Utilities Brace For Changes

Companies Are Meeting To Discuss What Deregulation Will Mean For Them.

October 21, 1997|By Maria Padilla of The Sentinel Staff

Utility executives are huddled at a Walt Disney World resort this week for a ''power summit,'' where deregulation is the most talked about and anticipated change in that industry.

Electric and gas companies are one of the most traditional and regulated of the nation's industries. But deregulation means the the utility business will not be as heavily regulated by government as it is today.

New regulations also may entice upstarts to enter the industry, as happened when airlines and long-distance telephone service were deregulated during the 1980s.

About 1,500 executives and analysts are discussing that and other topics at the Edison Electric Institute's annual financial conference at Disney's Yacht and Beach Club Resort. The conference meets through Wednesday and includes panel discussions and a trade show.

Big industrial states such as New York and California are poised at the starting gate of deregulation, with competition to begin next year.

That's because manufacturers and other volume users of electricity are actively pushing for lower rates. Other states set to start deregulation are Pennsylvania, Nevada and New Hampshire.

Nonindustrial states such as Florida, where electric rates are not as high as in other parts of the country, may have the luxury of watching what happens in California and elsewhere, and perhaps profiting from any mistakes.

''We will see deregulation here but at a slower pace,'' said Richard Korpan, president and chief executive officer of Florida Progress Corp., parent of Florida Power Co., based in St. Petersburg.

However, executives are worried about the dark side of deregulation and its impact on companies and consumers.

Small companies, unable to compete, may be gobbled up by larger ones. And consumers may not see residential utility rates drop as quickly as manufacturers.

Utilities are looking to balance these competing interests, which is a key reason why companies are forming joint ventures at lightning speed.

''This is becoming a collection of businesses rather than an integrated business,'' said Mitch Diamond, of Booz-Allen Hamilton's energy practice.

Partnerships are attractive to utilities because they are less costly than mergers, less permanent and spread the risk around.

A big goal for utilities is to ''bulk up'' with customers to boost monthly utility payments or revenue, but also to remain competitive.

As for consumers, there may be a lot of confusion ahead as companies vie for their business.

For instance, consumers may get dinner-hour calls from companies trying to persuade them to switch. And consumers may be uncertain of who is providing service to their homes as utilities lease their electric lines to other companies.